Up to half of European adults have now had at least one shot of the available Covid-19 vaccines, infection rates have fallen dramatically, and lockdowns are gradually easing across the continent. Vaccination success will allow Europe’s economic recovery to catch up with the US and China, says Robeco’s strategist Peter van der Welle.
Laura Becerra (Caixabank Research) | If we want to get a better understanding of monetary policy decision-making, we must pay close attention to changes in financial conditions. To do this, there is an important initial step: knowing how to measure them.
Crédito y Caución (Atradius) | In the first quarter of this year, French GDP grew 0.4% quarter- on- quarter, supported by the fact that another nationwide lockdown was held off until April. Growth was mainly driven by investment spending and a modest increase in private consumption. While the growth rate in Q2 will be affected by the comprehensive lockdownmeasures imposed in April, the gradual easing of those restrictions in May…
The market reaction has been benign as the ECB doesn’t seem to be in a rush to reduce its policy accommodation. Spreads have compressed a touch more after the press conference. Core yields are slightly up but this is mainly on UST moving up due to strong US CPI.
The European Court of Auditors assessed whether gender mainstreaming had been applied in the EU budget from 2014 onwards. Their conclusion is that there is not yet any effective framework to support gender mainstreaming, and that the EU’s budget cycle has not adequately taken gender equality into account.They found that only 4 out of the 58 2014-2020 spending programmes had explicit gender-related objectives.
Crédito y Caución (Atradius) | Despite the deep economic contraction in 2020, Italian business insolvencies decreased 29% year-on-year. The decline was mainly due to a temporary bankruptcy moratorium and fiscal support. However, with the expiry of temporary adjustments to insolvency law, it is expected that business failures will increase again in H2 of 2021. Looking at the cumulative insolvency growth between 2019 and 2021, Italian business failures are forecast to increase 4%, with further rising insolvencies expected in 2022
The Eurozone’s manufacturing PMI rose in May to 63.1 points from 62.9 points in April. May’s final reading is the highest ever for this indicator. In the case of Spain, the manufacturing PMI rose to 59.4, its highest level since May 1998.
Ricardo Jimenez (Sigma Rocket) | The average holding period of a stock has been dropping for many years – and in 2020 it hit a new low. A study by Reuters of NYSE companies found the average holding period is now five and a half months, compared with 14 months in 1999 and five years in the far-away 1970s. Over recent years, falling brokerage fees and higher volatility have accelerated the short-termism of investors.
Rigel Patricia Scheller (Scope Ratings) | Restricting people to their homes to contain the Covid-19 pandemic has changed how they shop, socialise, study and work. Some changes may prove long term, with far-reaching repercussions for real estate. The severity of the impact on office property is less clear.The Covid-19 impact on office space could markedly diverge across different parts of Europe. While the repercussions in some countries might be limited due to pre-pandemic remote-working trends, the impact might be stronger in countries with significant office space under construction, more pronounced vacancies and lower prevalence of home working before the pandemic started.
As sentiment around banks improves, and the prospect of interest rates to rise it’s become increasingly difficult to disregard the potential of AT1 CoCos. Its history of providing portfolios with some cushion in a rising rate environment is sure to be an attractive proposition for investors.